I am using a Factoring Company (receiving funds based on AR). What should my entry be when receiving the funds (with their charges) and then how do I receive AR?? We are a small company and do not have an on staff accountant. Thank you.

The appropriate entries will depend on how your factoring arrangement is structured. Without knowing the details I'll have to paint with a broad brush, but generally...

If you are selling your AR to the factor, then the receipt of funds from the factor would be booked as a sale; that is, Debit Cash and Credit AR, with an appropriate debit or credit (for the difference) to a gain or loss account. The collection of the AR would invoke a Credit to a short-term liability, which would be cleared when you remitted the collected funds to the factor.

If the factor's advances are considered a loan, with the AR as collateral, then you'd Debit Cash and Credit a short-term payable for the receipt of the cash from the factor. The collection of the AR would be booked as usual, and the subsequent remittance of cash to the factor would involve a Debit to the payable and a Credit to Cash. The interest expense, or factoring fees, would also be involved.

Hope that helped a bit.